Circuit Court for Baltimore County Case # 03-C-06-010932
The opinion of the court was delivered by: Harrell, J.
Exxon Mobil Corporation v. Ford, et al., No. 16, September Term 2012.
CIVIL PROCEDURE - APPEALS - APPELLATE JURISDICTION - IN BANC DETERMINATIONS
Regardless of whether the in banc panel of the Court of Special Appeals lacked a concurrence of a majority of the entire court in reaching its decision, the Court of Appeals's grant of Respondents' and Petitioner's petitions for Writs of Certiorari enables the Court of Appeals to consider and decide all issues that would have been cognizable by the intermediate appellate court.
TORTS - DAMAGES - EMOTIONAL DISTRESS FOR FEAR OF DEVELOPING DISEASE
To recover emotional distress damages for fear of developing a latent disease based on a defendant's tortious conduct, a plaintiff must show that (1) he or she was exposed actually to the toxic substance due to the defendant's tortious conduct; (2) which led him or her to fear objectively and reasonably that he or she would contract a disease; and, (3) as a result of the objective and reasonable fear, he or she manifested a physical injury capable of objective determination.
TORTS - DAMAGES - MEDICAL MONITORING
A plaintiff may recover damages for medical monitoring costs, usually through the administration of an equitable fund, upon a showing of the following: (1) the plaintiff was exposed significantly to a proven hazardous substance through the defendant's tortious conduct; (2) as a proximate result of significant exposure, the plaintiff suffers a significantly increased risk of contracting a latent disease greater than the general public; (3) the increased risk makes periodic diagnostic medical examinations reasonably necessary; and, (4) monitoring and testing procedures exist which make the early detection and treatment of the disease possible and beneficial.
TORTS - DAMAGES - EMOTIONAL DISTRESS FOR FEAR OF INJURY TO REAL PROPERTY
A plaintiff may ordinarily recover emotional distress damages attendant to injury to real property only in the presence of fraud, malice, or like motives.
DAMAGES - INJURY TO REAL PROPERTY - DUPLICATIVE COMPENSATION PROHIBITED
Owners of real property are not precluded necessarily from recovering both permanent diminution in value and loss of use and enjoyment damages, provided that the injuries for which recovery is sought do not overlap, so as to result in duplicative compensation. Where an alleged loss of use and enjoyment is "not distinguishable from" and "subsumed in" a claim for diminution in value, the impaired market value of the real property presumably reflects the complete injury, and a plaintiff may not recover damages for both loss of use and
enjoyment and diminution in value.
TORTS - INJURY TO REAL PROPERTY - NO PHYSICAL IMPACT TO LAND
In the absence of physical injury to real property resulting from a defendant's tortious actions, a plaintiff must demonstrate more than modest behavioral adjustments in his or her use of his or her real property in order to recover damages. Thus, a plaintiff who has not provided present proof of contamination must show more than a possibility of future contamination or mere annoyance in order to recover. Absent a substantial interference with a plaintiff's use and enjoyment of his or her land, any diminution in value suffered by a plaintiff is not compensable.
DAMAGES - INJURY TO REAL PROPERTY - LOSS OF USE AND ENJOYMENT
An award for compensatory damages must be anchored to a rational basis on which to ensure that the award is not merely speculative. In the context of damages for loss of use and enjoyment of real property, we determine that loss of use and enjoyment of real property cannot exceed the fair market, unimpaired value of the property at issue.
EXPERT TESTIMONY - VALUATION OF REAL PROPERTY
Expert testimony is required ordinarily to establish diminution in property value resulting from environmental contamination. Testimony of a real estate appraisal expert is admissible where he supported his assessments by various, but rationally-based, methodologies, despite the exclusion from ultimate consideration of comparable real estate market data.
LAY TESTIMONY - VALUATION OF REAL PROPERTY
Respondents' lay testimony as to their properties' diminution in value due to environmental contamination was not admissible or probative where Respondents testified that they believed their properties had decreased in value, but did not offer any substantive valuation or any specialized valuation expertise, and therefore did not support the actual damage awards made by the jury based on "zero sale value" of Respondents' properties.
Bell, C.J. Harrell Battaglia Greene Barbera McDonald Eldridge, John C. (Retired, Specially Assigned), JJ.
This is a companion case*fn1 brought by residents of Jacksonville, Maryland,*fn2 against
Exxon Mobil Corporation (Petitioner)*fn3 for an underground gasoline leak from an Exxon Mobil-owned gasoline service station, located at the corner of Jarrettsville Pike and Paper Mill Road in the Jacksonville area of Baltimore County, that began on 13 January 2006.*fn4 The leak detection system at the station failed to detect a punctured underground line leak, which caused a gasoline leak of approximately 26,000 gallons into the underground aquifer and resulted in the contamination of wells supplying water to a number of households over a period of more than thirty days.
On the record of this case, there is a dispute as to when the residents of the impacted Jacksonville neighborhood learned of the leak. While Exxon contends that it notified Herbert Meade, administrator for the oil control program in the Maryland Department of the Environment (MDE), of the spill on February 17, and that Meade contacted immediately the president of the local community association, Respondents maintain that they learned of the leak only after local media reported the story four days later.
Following notification of the leak, the MDE, pursuant to its statutory authority, ordered Exxon to submit an Interim Remedial Measure Plan. See Md. Code (1982, 2007), Environment Art., §§ 4-401-4-419. As part of its immediate remediation efforts, Exxon drilled wells for monitoring and recovery surrounding the proximate vicinity of the Exxon station. The monitoring wells were dug at various depths in order to conduct water samples indicating the presence and extent of the contamination, also known as the "strike line." The purpose of the recovery wells was to treat groundwater to prevent further expansion of the strike line. There were 227 monitoring wells installed by October 2007, and the MDE ordered an additional thirty wells in order to conduct long-term monitoring. Since February 2006, water samples have been taken from the monitoring wells and residential potable wells.
Respondents filed suit in the Circuit Court for Baltimore County against Exxon. Their claims alleged that their properties had decreased in value, and that their health was threatened as a result of exposure to toxic chemicals - specifically, methyl tertiary-butyl ether ("MTBE"), a possible carcinogen, and benzene, a known carcinogen*fn5 - in the gasoline leak. The Respondents' alleged exposure arose from their use of water from the potable wells on their properties. The properties owned by Respondents were located at varying distances from the source of the leak. The overview of Respondents' claims and summary of the evidence at trial are discussed below.
A single complaint was filed on 17 October 2006. Respondents, composed of eighty- four households,*fn6 sought compensatory and punitive damages based on allegations of fraudulent concealment,*fn7 intentional infliction of emotional distress, strict liability, trespass, private nuisance, and negligence.*fn8 They sought punitive damages and three types of compensatory damages: (1) monetary damages for diminution in the fair market value of their real property; (2) non-economic damages for emotional distress, including fear of contracting cancer; and (3) damages for the costs of future medical monitoring.
The claims of intentional infliction of emotional distress were dismissed subsequently by all Respondents, but the trespass counts were dismissed by only some Respondents. Petitioner admitted liability for trespass, private nuisance, negligence, and strict liability, but denied liability for fraud and punitive damages. Petitioner further maintained that certain of the compensatory damages claimed - non-economic emotional distress damages arising from injury to property and fear of cancer, and damages for medical monitoring costs - were not compensable under Maryland law.
The cases were consolidated by the Circuit Court for trial. On 14 October 2008, a jury trial began, presided over by the Honorable Maurice W. Baldwin, Jr., and lasted until 12 March 2009. Liability was not contested by Exxon, so the trial focused on whether any Respondents suffered compensable injuries as a proximate result of the leak and, if so, what compensatory damages should be awarded. The jury was asked also whether Exxon was liable for fraud warranting the award of punitive damages.*fn9
II. Contamination of Wells on Respondents' Properties
Of the eighty-four properties implicated in this case, water testing of the residential potable wells in 2006 indicated MTBE concentrations above the MDE action level of 20 ppb in only two.*fn10 Exxon paid for the installation of point of entry treatment ("POET") systems to filter well water entering those homes. Measurable amounts of MTBE below 20 ppb were found in samples from potable wells on sixty-three of the plaintiffs' properties in 2006. By the time of trial, however, the most recent samples revealed no potable wells with MTBE concentrations exceeding 20 ppb.*fn11 Although five potable wells tested for detectable amounts of benzene,*fn12 none of the potable well samples tested for benzene at an amount exceeding the MDE's 5 ppb action level.
Monitoring wells installed on all properties were used also to measure the extent of MTBE and benzene contamination. Monitoring wells were dug on at least thirteen of Respondents' properties, ranging from one to a maximum of nineteen monitoring wells on each property. The samples from the monitoring wells showed MTBE concentrations exceeding the action level on five properties.*fn13 Benzene levels exceeding the 5 ppb action level were found in samples from monitoring wells on four properties.*fn14
Respondents' testimony involved: the nature, extent, and impact of remediation activities on a particular property; the extent to which residents' outdoors and/or indoors activities were limited by the effects of the leak; the nature and extent of MTBE and/or benzene contamination on a property, as reflected by well test readings; whether harmful chemicals not attributable to gasoline were found in wells; the location of each property in relation to the strike line; the nature and extent of use of well water; the impact of the leak consequences on the value of each property;*fn15 employment and other financial concerns of Respondents; matters related to emotional distress; and Respondents' perceived need for future medical monitoring.
Much of the expert testimony at trial turned on whether a property had been contaminated by MTBE or benzene as a result of the leak, based on a property's location in relation to the strike line and the extent of contamination, if any.
Respondents' attorney arranged for any Respondent, who wished to, to see Abdul Malik, M.D., a psychiatrist. Eighty-seven individual plaintiffs accepted the offer. Thirteen sought follow-up treatment in Dr. Malik's office. Dr. Malik, and his colleagues, interviewed these Respondents individually for about forty-five minutes to an hour each. The parties stipulated at the beginning of trial that if a witness from Dr. Malik's organization, Psych Associates of Maryland, were called to testify, the witness would testify that each of these Respondents was diagnosed with a disorder that was caused by, or exacerbated by, the leak. The stipulation included a recitation that Petitioner disagreed with the proffered testimony and asserted that none of the Respondents suffered permanent psychological injuries or long- term emotional distress.
Eight of the Respondents covered by the stipulation had pre-existing psychological conditions that, at some point, required psychotherapy, counseling, or medication. Of those other Respondents covered by the stipulation, Dr. Malik did not recommend therapy or counseling for thirty-six of them, recommended treatment for twenty-one Respondents with no prior history of treatment for emotional distress, and advised four Respondents with pre-existing conditions to continue therapy.
A second stipulation was entered by the parties as to the testimony of Nachman Brautbar, M.D., where they agreed that, if Dr. Brautbar were called to testify, he would state that all Respondents required medical monitoring.*fn16 Dr. Brautbar recommended annual tests for testicular cancer, kidney cancer, liver cancer, and hematolymphatic cancers, with estimated total costs per Respondent of $2,000 per year.
Another expert for Respondents was Harvey Cohen, a geologist with a specialty in hydrogeology, who testified about the movement of ground water generally, the function of potable wells, his mapping of the well test results, and his opinion about future contamination of the aquifer. His opinion was that, from the time of commencement of the leak through April 2007, sixty-six properties had detectable levels of MTBE, and five had a detectable amount of benzene. He also described the levels of contaminants found in monitoring wells over the same time period. His testimony was based on exhibits displaying the maximum concentrations, without indicating the point in time at which those levels were recorded. He further opined that the area of contamination would be ever-changing because of the movement of ground water.
Edward Sullivan, a geologist with a specialty in hydrogeology, employed by the Whitman Companies, also testified as an expert for Respondents. He described underground fractures, aquifers, and the movement of ground water generally. Sullivan opined that the
detected levels of contamination were caused probably by the gasoline leak, that the Baigs' potable well likely would be contaminated in the future, and that the gasoline forced down in the deeper bedrock would likely not be recovered by remediation, and that it would be difficult to determine its movement.
Dr. Kenneth Rudo, a toxicologist employed by the State of North Carolina, also testified as an expert witness for Respondents. He stated that there is a relatively sparse body of knowledge relating to MTBE because it has been used in gasoline for only about twenty to thirty years. He opined that MTBE is a probable human carcinogen and a probable human mutagen, and that MTBE exposure can occur through ingestion, bathing or other skin contact, or breathing vapor containing MTBE. He stated that exposure produces an increased risk of cancer. Dr. Rudo testified that he could not state that any of the Respondents would, more likely than not, contract cancer as a result of the leak, but that there is "no safe level" of exposure to MTBE.*fn17
Kenneth Acks testified as an expert in real estate appraisal and "environmental economics." Relying on a stipulation by the parties as to the pre-leak value of each property and on information provided by the other experts, Acks' testimony discussed the diminished value of each property. We discuss Acks' testimony in greater detail in Section V.A. of this opinion.
Dr. Ira Whitman, Ph.D, a civil engineer, and Dr. Jerold Jaynes, Ph.D, an economist, were the last two experts who testified for Respondents. Dr. Whitman testified as an expert in environmental engineering and worked with the geologists, Cohen and Sullivan, to explain that thirty-eight or thirty-nine potable wells were likely contaminated between 13 January 2006 and 17 February 2006. He noted that, as of the date of his 2006 report, fifty homes showed some contamination at some point in time, and that number later rose to sixty-six homes.*fn18 Dr. Jaynes testified about the present value of the cost of future medical monitoring for Respondents.*fn19
Petitioner's expert, Dr. Gary Krieger, M.D., testified that all people in this country are exposed to carcinogens and mutagens, including MTBE and benzene, every day, including in food and water that is consumed. He emphasized that the dose is the real issue -- essentially, that mere exposure does not cause cancer. He further stated that the risk of disease Respondents faced was no different than the risk of disease for the general population.
Ronald Lipman, a real estate appraiser, testified that, in 2007 and 2008, there was a general downturn in the real estate market nationally, and that the effect of the gasoline leak on property values in Jacksonville ranged from 0% to 15 %, depending on the property. Another expert for Petitioner was Gregory Martin, who described the remediation efforts conducted pursuant to a consent order entered into between the MDE and Petitioner. In compliance with the order, Petitioner filed a corrective action plan and intends to continue efforts until the remediation goals are met.
Herbert Meade, administrator for the oil control program in the MDE, testified regarding the Maryland action level for MTBE. He asserted that the MDE action level is protective of human health. Significantly, he noted that MTBE is the most frequently found ground water contaminant in Maryland. With respect to the properties in this case, he stated that some needed filter systems and others should have them as a precautionary matter, but that the potable well water is safe to drink. Meade also acknowledged that, because of the lack of human studies, he did not know the long term effects of exposure to MTBE.
Thomas Maguire, another expert testifying for Petitioner, discussed the nature of an underground fuel leak and how gasoline and its contaminants are dispersed, removed, or attenuated naturally. He opined that the underground plume for this leak had stabilized, meaning the residual contaminants were trapped and immobile.*fn20 He acknowledged there likely was still some residual contamination which, ...